2023 was a bounce-back year for stock markets after a rough 2022 in which staying invested and dollar cost averaging (again) proved to be beneficial for financial net worth growth. The S&P 500 returned +26% growth after losing 18% in 2022. My portfolio, largely invested in the stock market, also benefited greatly from the total stock market gains. Below are a few highlights from both my stock and real estate investments along with my goals in 2024.
Stock Portfolio
In 2023 I continued to invest 15% of my paycheck into my 401k as well as investing $500 per month in a mix of hand-picked investments (primarily ETFs). My tax-advantaged retirement fund increased 37% last year, including contributions, and my taxable brokerage account increased 28%. While I fully acknowledge that most of my gains were a result of non-controllable / total market gains, I continue to prove that a long-term mindset is important to managing the volatility in this market. In 2024, my goal is to (1) continue to invest 15% into my tax-advantaged retirement fund and also (2) start creating an income focused portfolio in which my goal is focused more on dividend income than growth. My goal is to build a defensive position against market volatility and create an income stream throughout my 40s that will eventually replace my W-2 income.
Real Estate
My single real estate holding continued to show mixed results. I had a vacancy for 2 months last year which negatively impacted cash flow, but the perceived appreciation on the asset as well as the cash flow when it’s rented are still providing financial benefit. While not as high as my stock portfolio, I did return +12% on my real estate holding. My goal in 2024 is to continue to look for new assets to invest in – while I haven’t found any recently, I’m building a cash reserve that will allow me to take advantage if the opportunity presents itself. It’s not a top priority, but I am looking for ways to invest in assets outside of the stock market in order to diversify.
Cash
There are strong opinions on how much cash you should have, but I continue to maintain 3-5 months of living expenses with a goal of increasing that to 6+ in 2024. Current interest rates on savings are healthy and I expect more opportunities in the future to buy discounted assets which I’m building a reserve so that I can take advantage when the opportunity presents itself.
2024
I expect the next few years to be extremely volatile – geopolitical risk, divisive election, perceived disinflation can all materially impact what I consider to be a very fragile market. My main focus is to continue to build a portfolio that is financially unbreakable and that can support me in “all seasons.” Tactically, I am building my cash reserve higher (6+ months of living expenses) and focusing on building out my low volatility income generating portfolio (Bonds, REITS, etc.) that may do better than growth in a volatile environment. While I will always be a long-term bull and will always be investing in the market (yes to dollar cost averaging!) I am a believer than we’ll see some big market adjustments in the short to medium term. Cheers to next year!
